The Australian Article: Property vs Shares

[Sunfish]

Quote:
Originally Posted by dtraeger2k
How many people had $10K in cash in 1972?

that's about 3 luxury car's worth of cash.

The GT Falcon (not the HO) didn't cost much over $3 grand. And you could have any colour you liked, as long as you liked Gold.

Edit:

Just 8 Months after the release of the new XR range, Ford released the XR GT. Powered by a 289 cubic inch Windsor V8 motor, it was always going to be a hit.

On April 18, 1967, Ford's General Sales Manager, Keith Horner, issued a Confidential Dealer Bulletin headed "Falcon GT". The bulletin was short and to the point. The new model would be a "High Performance" vehicle especially suitable for trial and stock car racing but flexible enough and luxurious enough for normal car use.

It will be available in one colour "GT Gold" with charcoal trim, have a high-performance, 4 barrel, 289 cubic inch V8 Windsor with 225hp. A floor mounted manual transmission with synchromesh on all four speeds, special suspension, wider rimmed wheels, radial ply tyres and a 16:1 steering ratio with power steering "optional". The bulletin continued…The price was $3,890.00.

The XR Falcon GT was indeed an instant success and the 596 units built between March 1967 and February 1968 sold as quickly as they were built. It quickly established its credibility with a convincing 1-2 victory in the Bathurst 500 mile classic.

(Moffett and Bond????)

 

[Peter Parker]

How many people had $10K in cash in 1972?

Not everyone but quite a few would have. The average wage back then was around 3k pa. So $10k would be around 3 years of wages.

In today's money (x20) $10k would be about $200k, which plenty of people have, if not in cash, at least in equity.

 

[Intrinsic_Value]

At the end of the day the net result is heavily influenced by the utilisation of debt.

However the fact that property does allow higher 'safe' gearing could also be its archilles heel.

I am feeling very uncomfortable with residential property on a less than 5 year basis.

There was an article out today by Charlie Aitken, even the brokers are 'forecasting' 9.5% p.a. growth in residential poperty prices over the next 3 years and this in combination with estimated interest rates going up above 9%


How the residential market will play out is anybodies guess, but be careful out there.

I am hearing far too much talk along the same lines that was used pre 2008 by the buy&hold share investors that coupled their share investment with debt.

Now if people where wrong about this (and its easy to see on this forum the same attitude, just go to posts pre 2008 that relate to shares), could they also be wrong about property.

I have no problems with property as a long term wealth creation vehicle, but to get to the long term you have to move through the short and medium terms as well.

 

[cadence]

Where do you keep your gold?

If you hold more than a dozen bars, I'd expect you to pay for a safe in a bank ... how much do they charge these days?

 

[hobo-jo]

The bulletin continued…The price was $3,890.00.
The XR Falcon GT was indeed an instant success and the 596 units built between March 1967 and February 1968 sold as quickly as they were built. It quickly established its credibility with a convincing 1-2 victory in the Bathurst 500 mile classic.

An XR GT that is complete with all its original equipment, matching numbers, and is in good condition will command as much as $60,000.

http://www.carsguide.com.au/site/news-and-reviews/buyers-guide/ford_falcon_gt_1967_buyers_guide

That's a pretty decent return for what is normally a depreciating asset

how much do they charge these days?

My local was around $40 setup, $5pm

 

[Oynas]

Going back centuries, both gold and real estate seem to be very poor investments, although after the 1970s both have done well.

Source: http://images.verifiable.com

Source: http://www.dinkumdemocrats.com/

Stock market (DJIA at least) seems to have done very well throughout the last century, although in the last 10 years things have not gone well.

Source: Visualizing Economics

Where do you keep your gold?

If you hold more than a dozen bars, I'd expect you to pay for a safe in a bank ... how much do they charge these days?

Many people buy gold ETFs, e.g. ticker symbol GOLD on the ASX. The management fee is 0.4% of the value of the gold stored per year.

 

[Sunfish]

The gold chart is meaningless because the price of gold was pegged (US$35/oz???) until '73 when Nixon "closed the gold window" because De Gaulle was insisting on gold instead of $US in foreign exchange and Sorros's hedge fund was betting against the $US.

Before that the chart would be pretty much the exchange rate but even that was pegged so I'm not sure what it is telling us.

 

[Intrinsic_Value]

Source: http://www.dinkumdemocrats.com/

.

This is a great chart, something to really reflect on.
There are cycles within cycles, some shorter some longer.

This is one very very interesting.

I know the property perma bulls will explain it away through the 'uniquencess' of property and through the 'inappropriateness of medium averages'.

But it is food for thought.

At the back of my mind i still have two overriding concerns:
(a) long term interest rates have been trending downwards since 1980. This is a 30 year downwards cycle. Its now approaching zero, there is not much 'fat left'.
(b) changing composition of family earners from a single earner to a dual earning family, to what degree is this already 'factored' into prices.

(a) is also a concern for shares by the way, as interest rates are implicit in many discount factors used.